Analysts are predicting an uncertain future for the property and banking sectors for the rest of 2020 and into 2021. 

DBS analysts Lim Rui Wen and Derek Tan expects job losses and resident unemployment rate to hit a high of around 98,000 and 4.2% by end-2020 respectively, as Singapore’s economy is expected to post its steepest contraction due to the COVID-19 pandemic. 

This will continue to weigh on the outlook for the property market and banking sectors, especially with government job support measures ending by 3Q20. Further macroeconomic data points such as potential structural job changes post COVID-19 and future tightening of foreign policies impacting the rental market will be keenly watched.

Lim and Tan expect the property market to decline by 10% until 1H21, as impending market risks may lead to higher job insecurity and weak demand in the property upgrader segment.

Recent market optimism will likely be short-lived, and their analysis found that a median household may face mortgage repayment difficulties if one household member is retrenched and remains unemployed. This segment forms 9% of total households in Singapore. 

Furthermore, other risks also a potential downgrade cycle, resulting in increased inventory in a declining market and demand-supply imbalances as homeowners prefer bigger units to cater to work-from-home arrangements.

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